Legal Question in Real Estate Law in California
equitable sharing of real estate profits
I found a condo to buy with my own money in 1997. But my credit was weak. My 24 year old son had better credit. So, I offered him a ''deal''. If he got the loan then I offered to split the profits after the condo was sold in two years. He then agreed to get the loan.
Before this first condo was sold, I signed a builder's contract to buy a second condo with more of my money. He again agreed to sign for the loan. (Note: there was no talk about splitting the profit this time.) So I substituted him in as the buyer. Soon after the second condo was bought in 2000, the first condo was sold. Then the second condo was sold in 2002. The net profits from the 2 sales was about $250K. We intended to buy more real estate which I found.
However, instead, he used all the above $250K profits to buy a home for his new family.
He is not willing to share any of the profits with me. He claims he incurred over 90% of the risk and I only made the down payments, which he did return. He claims all the profits are his because his name was on the title.
I am 64 and have 4 other school age children to support. I need some money. He needs to learn a lesson in ethics, I believe. What recourse do I have?
6 Answers from Attorneys
Re: equitable sharing of real estate profits
See an attorney as soon as possible. Your claim may already be barred by the statute of limitations. Real estate agreements are suppose to be in writing, but depending on the circumstances, you can sometimes get around this. You have to sue him for fraud and breach of contract to have any hope of recovering money from him.
Re: equitable sharing of real estate profits
anything in writing between you and son?
Re: equitable sharing of real estate profits
This is a typical joint venture scenario. Although the existence of a written agreement is normally required for dealings in real estate (Statute of Frauds, Civil Code 1624), your situation presents an exception. You can sue for your share of the profits. You can also sue for constructive trust, which is an equitable vehicle which will allow you to trace the funds into your son's home. You can then file a lis pendens on your son's property and cloud title to it until your case is resolved. We have several real estate cases like this. Give us a call. The call is free.
Re: equitable sharing of real estate profits
Well you know you made a mistake trusting him. Anyway, you can sue for fraud and possibly constructive trust. I have fought similar cases successfully, so I know the obstacles you will have to hurdle. You may contact me and we can file suit.
Re: equitable sharing of real estate profits
Let me give you a fifth and different point of view.
To the extent the previous answers mention breach of contract and fraud, they are on the right track. The problems that will arise are the statute of frauds, which says contracts to convey an interest in real property must be in writing; and the statute of limitations, which requires suits based upon an oral contract (that would be the breach and fraud causes of action) must be brought within two years. Both rules are full of exceptions so they aren't absolute barriers to suit, but getting around them will be tough.
Any suggestion to sue for "constructive trust" is a bit off base. A constructive trust is a remedy rather than a cause of action like "negligence" "trespass" "breach of contract" etc. -- asking the court to impose a constructive trust is a good idea but, like money damages, you have to prevail on a cause of action before the court can award it.
Further, you mustn't put a lis pendens on your son's property. A lis pendens, or (in English) a "Notice of Pendency of Action" may appropriately be filed only when the plaintiff disputes a right of ownership or possession in the defendant's real property. You don't have an ownership claim against your son's house and you would only create a legal problem for youself if you filed a lis pendens. You are seeking a money judgment, not asserting a real-property claim.
If I were handling this case, I would stress causes of action based upon partnership law and on purchase-money resulting trust (PMRT). Oral partnership agreements are more readily enforced than oran real-estate contracts, for one; also, there is a higher standard of fairness expected between partners than between parties to a contract.
A PMRT is a theory that says if X puts up the down payment and Y ends up on title, and no gift was intended and no contract shows a different result was intended, then Y holds title for X as an involuntary trustee and must convey to X on demand.
I would consider taking your case on a contingency basis.
Re: equitable sharing of real estate profits
Breach of a verbal contract is actionable. Call me directly at (619) 222-3504.
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